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Overview of the clinic compensation funding framework

Friday, February 1, 2013

In 2012, LAO embarked on a process to modernize its clinic compensation funding model in order to reflect public sector compensation practices and align clinic compensation with the social justice sector.

LAO embarked on this review because it had the following concerns with the current compensation funding model:

has no defined maximum on the grid to cap salary funding

contains salary compression

has no policy framework related to use of other sources of funding to increase salaries

has no policy framework within which Clinic Boards can provide pay-for-performance increases or bonus payments.

LAO staff met with Clinic Board Chairs or a Clinic Board representative, and Executive Directors of most clinics throughout the fall of 2012 and had various meetings with the ACLCO and the HayGroup during this time. Various issues raised by clinics during the consultation led to the creation of a “Questions and Answers” document which is available to clinics on LAO’s website, at www.legalaid.on.ca/en/publications/consultations_clinic_faqs.asp

Following the consultation process with clinics, LAO developed a draft Clinic Compensation Funding Framework, which was presented to the ACLCO on Nov. 30, 2012.

The ACLCO, with a submission from the HayGroup, sent their submission to LAO on December 21, 2012. Key issues expressed in their submission are addressed in the Questions and Answers section.

The LAO Board approved a New Clinic Compensation Funding Framework dated Nov. 30, 2012 and the following key policies:

The funding maximums for the positions are:

Clinic role

Position funding maximums

Executive director

$137,189

Lawyers

$115,000

Communty legal workers

$78,873

Office managers

$65,372

Support staff

$46,920

LAO will maintain the current funding levels for clinic positions currently funded above the maximum level. When the incumbent in the position leaves the clinic, LAO will decrease funding and fund the incumbent’s successor to the maximum. LAO will maintain existing levels of funding for positions, so long as funding levels are at or below the positions’ funding maximums.

Effective April 1, 2013, LAO will not claw back compensation funding when staff turnover results in the new position’s salary being lower than that of the previous position incumbent. If the hiring of a new employee results in savings, clinics may allocate the compensation funding to address other compensation related funding pressures.

A policy to address the use of other source funding to increase salaries will be developed by LAO.

A policy to enable Clinic Boards to develop a pay-for-performance policy will be developed by LAO.

Questions and Answers related to the new Clinic Compensation Funding Framework and the Clinic Compensation Increase for 2012/13

Is the new Clinic Compensation Funding Framework “revenue neutral” in the release of the compensation funding related to the New Investment?

Yes. The release of the 2012/13 compensation funding to clinics from the New Investment funding exhausts the entire New Investment funding for clinic compensation, and represents a total increase in compensation funding to clinics, since 2009/10, of 16.75%.

Is the implementation of the Clinic Compensation Funding Framework a way for LAO to avoid providing clinics with the compensation funding increase for 2012/13?

No. The LAO Board respects the government’s direction and has always fully met, and intended to meet, its obligations and requirements under the ambit of the New Investment funding.

Is the implementation of the Clinic Compensation Funding Framework a way for LAO to decrease the amount of funding available for poverty law services in the future?

No. The purpose of the Clinic Compensation Funding Framework is to address concerns with the existing clinic compensation model and modernize it to reflect public sector practices.

In fact, LAO proposes to maintain existing levels of funding for positions, so long as funding levels are at or below the positions’ funding maximums. LAO proposes to not claw back compensation funding when staff turnover results in the new employee’s salary being lower than that of the previous incumbent (the current practice). This means that future funding under the Clinic Compensation Funding Framework could be greater than the funding provided under the current grid funding system.

Implementing a compensation framework was part of the government’s direction for the release of the compensation increases to clinics under the New Investment funding.

Why isn’t LAO giving clinics the full five per cent clinics thought was promised to them?

Compensation funding increases for clinics for 2012/13, of a two per cent across-the-board increase effective April 1, 2012, and one per cent pay equity effective Jan. 1, 2013, allocates the entire amount remaining within the New Investment funding for clinic compensation increases. The increases were approved by the provincial government.

Eliminating the funding grid as part of this new Clinic Compensation Funding Framework will add significant new administrative work for Clinic Boards; can LAO help Clinic Boards with the transition?

Yes. LAO is committed to providing support and guidance to Clinic Boards on compensation best practices and assisting with the development of policies for the application of salary increases.

In the letter from the HayGroup attached to the ACLCO response, it says that LAO and the ACLCO should have worked together to develop the job descriptions for clinic roles; why didn’t LAO take that approach?

In 2002, LAO struck a joint committee of LAO and clinic representatives from across the province to define the key roles within the clinic system. This committee met regularly over a period of about one year. The committee came up with the five key roles that LAO uses as part of its current funding model: Executive Director, Lawyer, Community Legal Worker, Office Manager, and Administrative Support. This committee also developed job descriptions for these roles.

A second committee, with clinic representation, was struck to evaluate these five key roles using LAO’s job evaluation tool. The committee was trained in the job evaluation system and the basics of compensation. The job evaluation process was led and supported by an external consultant, Nadine Winters and Associates, and LAO staff.

Given the extent of the work jointly done in 2002 and the fact that the roles within the clinics have not substantially changed since 2002, LAO did not believe that a review of the job descriptions was necessary.

LAO provided the ACLCO with all of these job descriptions early in the process and no changes were proposed.

Will the Clinic Compensation Funding Framework be adjusted if the scope of responsibility of clinic roles changes substantially over time?

Possibly. If there are substantive changes in scope and responsibility, LAO will review the new role(s) and determine an appropriate market comparator as a basis of compensation funding. If the scope of responsibility has increased substantially, the Framework will be adjusted.

Does the Clinic Compensation Funding Framework include an annual cost-of-living increase?

No. The funding maximums for positions will be reconsidered through future market reviews, anticipated to be performed every two to three years.

Isn’t including a cost-of-living funding increase for employees at or above the cap a standard practice in the public sector?

No. Salary ranges are adjusted based on market reviews. Standard practice in the public sector is that employees’ salaries are capped once they have reached the maximum of the salary range. If a pay-for-performance policy exists for these employees, they may be eligible for a one-time bonus.

In fact, since March 25, 2010, with the implementation of the Public Sector Compensation Restraint Act, and further in 2012 with the enactment of amendments to Bill 55, Schedule 4, Broader Public Sector Accountability Act, 2010, the Government of Ontario has restricted movements of salary ranges within the Ontario Public Service and broader public sector. Any expectation of financial guarantees is inconsistent with the fiscal reality of virtually all government jurisdictions in Canada and globally.

Is the process that LAO used in developing its proposal grounded in sound human resource and compensation theory?

Yes. Even though LAO did not obtain comparator information about salaries within the social justice sector independently, the information was readily available.

Why did LAO focus its comparator analysis on the Social Justice Sector?

The Social Justice Sector is the market within which LAO and clinics work; therefore, salaries within LAO and the clinic system need to be aligned within this sector.

Does the Clinic Compensation Funding Framework provide any positive news to Clinic Boards?

Yes. LAO will maintain existing levels of funding for positions, so long as funding levels are at or below the positions’ funding maximums. LAO will not claw back compensation funding when staff turnover results in the new employee’s salary being lower than that of the previous incumbent (the current practice). This means that future funding could be greater than funding provided under the current grid funding system and that Clinic Boards will have greater flexibility within the compensation funding component of their funding envelope grant.

When is the new Clinic Compensation Funding Framework effective?

As per government direction, the compensation increase for 2012/13 will be flowed using the funding maximums for positions under the new Clinic Compensation Funding Framework. Moving away from the funding grid, including eliminating LAO’s current practice of clawing back compensation funding when new employee year-of-call is more recent than the previous incumbent, will come into effect April 1, 2013.

Addressing the HayGroup Commentary attached to the ACLCO’s Submission to LAO on the Draft Clinic Compensation Funding Framework

The following comments are in reference to the document sent Dec. 19, 2012 by Moshe Greengarten of HayGroup in consultation to the ACLCO on LAO’s Clinic Compensation Framework.

a) “From a best practice perspective, the starting point for developing a compensation structure should be a compensation philosophy or strategy.”

LAO’s response:

While the statement made by HayGroup in general is true, it needs to be noted that LAO’s intention in developing a new Clinic Compensation Funding Framework was not to “develop a compensation structure” for the clinics. A compensation structure would not only include salary ranges, but would determine “steps” within the ranges.

b) “…LAO and Clinics should jointly define what are the skills required by the Clinics to deliver on their mandate” and “….determine what is the appropriate compensation that is required to ensure that Clinics are able to attract and retain these skills.”

LAO’s response:

In 2002, LAO struck a joint committee of LAO and clinic representatives from across the province to define the key roles within the clinic system. This committee met regularly over a period of about one year. The committee came up with the five key roles that LAO uses as part of its current funding model: Executive Director, Lawyer, Community Legal Worker, Office Manager, and Administrative Support. This committee also developed job descriptions for these roles.

A second committee with clinic representation was struck to evaluate these five key roles using LAO’s job evaluation tool. The committee reviewed the job evaluation tool, suggested changes, and was trained in the job evaluation system and the basics of compensation. The job evaluation process was led and supported by an external consultant, Nadine Winters and Associates, and LAO staff.

As part of this process, the five key roles of clinics were aligned with five roles within LAO. Based on this alignment of roles between clinics and LAO, the salary funding ranges for clinics were increased to match the LAO salary ranges.

Given the extent of the work jointly done in 2002 and the fact that the roles within clinics have not substantially changed since 2002, LAO did not believe that a review of the job descriptions was necessary.

In addition, during the consultation process, in August 2012 and again on Dec. 3, 2012, LAO provided the ACLCO and the HayGroup with copies of the job descriptions established in 2002. No comments were received from the ACLCO.

a) “….there was no discussion with the Clinics as to the appropriateness of the selected sectors and organizations.”

LAO’s response:

One of the foundational principles in the development of the framework is that compensation funding for clinics be aligned with best practices of the public sector and, since clinics are part of and work within the social justice sector, that the social justice sector be the main comparator;

The consultation process identified a request to also include information from the municipal sector and the City of Toronto;

LAO concurred and requested Mercer Consultants to provide LAO with municipal data that they had readily at hand;

This information was consolidated with the information collected by LAO from the social justice sector organizations;

Therefore LAO did incorporate municipal sector comparators as part of its analysis, as suggested by the ACLCO.

b) “Further, in many cases, these organizations employ several roles that might be comparable to Clinic roles; in these cases, there has been no discussion with the Clinics as to the appropriateness of the selected roles as comparators.”

LAO’s response:

LAO reviewed the roles within the selected social justice sector comparators to determine their size and scope of responsibility compared to those in the clinic system. This information was readily and publicly available. The following provides examples of how the information was obtained for lawyer roles within the following organizations:

Legal Aid Data for B.C., Saskatchewan and Manitoba were either on their website or confirmed in email.

Federal Department of Justice: was fully disclosed on website.

MAG provided LAO with the information directly.

Other groups provided LAO with detailed survey information and confirmation of salary matches.

“The job descriptions used by LAO as the basis for obtaining market data were developed in 2002. This information was not reviewed with Clinics prior to obtaining the market data to determine if there have been any changes in the jobs over the past 10 years.“

LAO’s response:

See response in 1 b) above.

“The ranges proposed by Mercer are based on compensation data for the municipal sector derived from Mercer’s database and data for the social justice sector provided by LAO. Mercer has not conducted an independent analysis of the data provided by LAO”

LAO’s response:

An independent analysis was not required for social justice sector information because the information was readily available. LAO did not request Mercer to validate its information. All the work done by LAO’s HR department is documented.

“Further, Mercer used the 2002 Clinic job descriptions to benchmark Clinic jobs to their municipal sector database. Mercer did not conduct an independent analysis to determine if the job information provided by LAO is up-to-date, reflecting current conditions.”

LAO’s response:

See response to 1 b) above.

“Similarly, we understand that the 2002 Clinic job descriptions were used by some of the social justice organizations that were surveyed by LAO to benchmark Clinic positions to their own jobs.”

LAO’s response:

See response to 1 b) above.

“The 2002 Clinic job descriptions were used by LAO to benchmark Clinic positions to their own jobs.”

LAO’s response:

See response to 1 b) above.

“We further understand that the comparison of Clinic jobs to LAO roles was established based on a job evaluation exercise that was conducted jointly by LAO and Clinic representatives in 2002. We have several concerns about this exercise:

LAO staff have stated that the job evaluation tool used to compare Clinic job to LAO positions was developed for internal use by LAO and is not suitable for evaluating jobs in other organizations. Therefore, the whole basis for comparing Clinic and LAO jobs is questionable.”

LAO’s response:

LAO disagrees. LAO believes that the roles within LAO and the Clinic system are not substantially different than the roles performed by other social justice sector organizations with a similar scope of responsibility.

“Clinic and LAO jobs may have changed in the past decade. Neither the job information nor the job evaluation benchmarking process was updated to reflect current conditions.”

LAO’s response:

The Clinic roles have not substantially changed since 2002. The HayGroup is correct, though, to point out that LAO’s roles have changed, especially since regionalization. LAO’s Local Area Director roles have been eliminated and replaced with District Area Directors. In 2002, the local Area Director role was the comparator established against the Clinic Executive Director role. The Clinic Compensation Funding Framework aligns the Clinic Executive Director role with District Area Directors, to the advantage of the clinics since the scope and responsibilities of the Clinic Executive Directors, for the most part, have not changed.

“We have observed that Clinic staff lack the human resources expertise that would allow time to meaningfully participate in a job evaluation process. We therefore are concerned that Clinic staff were unable to participate in the joint job evaluation process in 2002 in an informed manner.”

LAO’s response:

All of the participants on the 2002 job evaluation committee were trained by an external consultant on the job evaluation system. LAO participants in this process were employees without human resources training. LAO disagrees that the participants in this process were unable to do so in an informed manner.

“The market comparison between Clinics’ compensation and other sectors is based solely on salary. It does not take into account other compensation elements, such as bonuses, benefits and pensions. For example, comparator positions in the municipal and provincial government sectors generally have defined benefit pension plans while Clinics do not provide such plans. By confining the comparison to base salary, the study underestimates the total value of the compensation of many of the market comparator roles.”

LAO’s response:

LAO agrees. The framework currently addresses only base pay issues. A review of clinic benefits and pension is not part of its scope. That said, the benefits that LAO funds for clinics are similar to the benefits LAO provides its own employees. Therefore, the alignment of Clinic position maximums with LAO’s salary range maximum puts both the Clinics and LAO on the same total compensation basis, with the exclusion of pay equity monies which only clinic employees receive.

“There is no provision in the funding framework for salary increases reflecting cost-of-living or other market factors, or changes in Clinic roles that may occur in the future. The framework should provide for annual increases and, at a minimum, formal market reviews every three years to ensure that Clinics salaries remain competitive.”

LAO’s response:

Salary ranges are adjusted based on market reviews. Standard practice in the public sector is that employees’ salaries are capped once they have reached the maximum of the salary range. If a pay-for-performance policy exists for these employees, they may be eligible for a one-time bonus.

If there are substantive changes in scope and responsibility, LAO will review the new role(s) and determine an appropriate market comparator as a basis of compensation funding.

LAO agrees that a market review should be conducted approximately every three years.

Contacts

Legal Aid Ontario (LAO), an independent but publicly funded and publicly accountable non-profit corporation. None of this material may be commercially reproduced, but copying for other purposes, with credit, is encouraged.